Mining giant BHP has reported a slump in full-year net profit after writedowns and other charges and has warned of further volatility in commodity markets.
Net profit fell 39 per cent to $US7.9 billion ($A11.7 billion) in the year to June 30, after $US2.7 billion ($A4.0 billion) was written off the value of mothballed Australian nickel assets and a $US3.8 billion ($A5.6 billion) charge for the Samarco dam disaster in Brazil.
However, underlying profit rose two per cent to $US13.7 billion ($A20.2 billion) on record volumes of iron ore and a nine per cent rise in copper production, the company reported on Tuesday.
“In the near term, we expect volatility in global commodity markets, with China experiencing an uneven recovery.” chief executive Mike Henry said.
The impact of higher interest rates was expected to continue to restrain household consumption in advanced economies for the remainder of 2024, but BHP said it expected steel, copper and nickel demand to recover.
BHP put Western Australia Nickel operations into temporary suspension, as a result of global oversupply, and said it would continue to support workers and communities impacted by this decision.
“We believe that China’s economic transition could accelerate its demand shift increasingly towards future-facing commodities,” BHP said.
Higher prices for iron ore and copper were partly offset by lower thermal coal and nickel prices, and lower steelmaking coal volumes after BHP offloaded the Blackwater and Daunia coal mines in Queensland.
Revenue rose US$US1.8 billion ($A2.7 billion) or three per cent to $US55.7 billion ($A82.2 billion), while underlying earnings rose four per cent to $US29 billion ($A43 billion).
“We delivered record volumes at Western Australia Iron Ore, where we extended our lead as the world’s lowest cost iron ore producer,” Mr Henry said.
Overall copper volumes rose nine per cent for the second consecutive year and BHP expected to deliver a further four per cent in the 2025 financial year.
“The longer-term fundamentals that drive demand for our products remain compelling,” Mr Henry said.
BHP cut its final dividend to US 74 cents per share, fully franked, to preserve capital for acquisitions, expansion in potash and decarbonisation.
This post was originally published on Michael West.